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APA — Australian Pipeline Trust — National Power Conference 2004
22 slides from APA's conference presentation, Aug 17, 2004
Slide 1: Investing in New Infrastructure to Secure Gas Supplies
Australian Pipeline Trust Investing in New Infrastructure to Secure Gas Supplies Jim McDonald Managing Director National Power Conference 17 Aug 2004 Melbourne
Slide 2: Agenda
Agenda The Issues The Challenges Changing Dynamics Future Supply Options Existing Fields CBM Northern Gas Regulation Policy Issues 2
Slide 3: The Issues
The Issues ABARE indicates a shortfall in supply from existing gas fields by early next decade. Australia has an abundance of natural gas, but not close to existing markets. Customers are concerned about availability, security and prices from existing gas supplies. Work on alternative supplies is re
Slide 4: Natural Gas Consumption by State
Natural Gas Consumption by State 2002 - 2020 (PJ / annum) State 2002 2005 2010 2015 2020 and FY NSW 114 124 147.7 173 199.7 VIC 243.8 263.6 308.2 357.7 408.6 QLD 85.6 126.6 164.8 185.2 212.4 SA 141.8 139.2 166.3 185.2 206.7 TAS 0 9.9 17.8 20 21.4 East Aus 585.2 663.3 804.8 921.1 1048.8 Subtotal WA 3
Slide 5: A Producer's view - Origin
A Producer’s view - Origin Source: Origin Energy (May 2004) 5
Slide 6: ABARE vs Origin Forecasts: Eastern Australian gas demand
ABARE vs Origin Forecasts Eastern Australian gas demand ABARE Vs Origin Energy estimates 2004 ABARE Origin Energy 1100 Total Cumulative Difference 2002 to 2020 = 1859 PJ Eastern Australian gas 1000 demand (PJ) 900 800 700 600 500 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year ending June 30
Slide 7: The Challenges
The Challenges Short term need: well priced, adequate supplies to expand position of gas in the energy mix, and gas fired generation and diesel substitution. Medium term need: to encourage delivery of northern or north-western gas to south-east Australia. To improve the regulatory environment. To de
Slide 8: Changing Dynamics No.1
Changing Dynamics No.1 “The gas transmission industry is in transition at the ownership level. The wider energy industry (gas & electricity) in transition. The nature of economic regulation of energy - gas & electricity in transition.” Dr. Allen Beasley, APIA - 21 July 2004 Vertical and horizontal i
Slide 9: Changing Dynamics No.2
Changing Dynamics No.2 Major changes in ownership of transmission assets, some have just transpired / underway. Emergence of “Trust” and “Institutional” type vehicles as the ultimate owners of transmission assets. Confirmation that new pipeline development is a highly contestable process. Emergence
Slide 10: Changing Dynamics No.3
Changing Dynamics No.3 Physical interconnection of NSW, VIC, TAS & SA and “virtual” interconnection of QLD. Eastern markets beginning to work due investment by transmission companies. Otway and Gippsland supplies displace Moomba gas in Adelaide reducing demand on Cooper Basin. Changes to acreage man
Slide 11: Changing Dynamics No.4
Changing Dynamics No.4 Resurgence in the Surat, including CBM, has expanded gas supply for Queensland and facilitated QLD gas into southern markets by SWAPS. Advanced seismic techniques target new reserves. Planned QLD - NSW connections will displace Moomba gas in Moomba to Sydney Pipeline. Ageing s
Slide 12: Challenges for CBM Producers
Challenges for CBM Producers APT’s Perception Balancing production profiles with end user demand patterns. Getting gas to markets. Capital constraints. Question: Are CBM contracts “bankable”? APT seeking a greater understanding of these issues to enable better solutions. Considering investment in CB
Slide 13: Northern Gas
Northern Gas Impact of CBM / Surat will delay PNG. Difficult to aggregate 150 PJ / annum. WA Government - Recent study concludes trans- national pipeline necessary by 2015 if no PNG pipeline in place. It will require aggregated contracts consolidating a larger load and thus a larger pipeline. New pi
Slide 14: Expansion at Risk Due to Tariff Regulation
Expansion at Risk Due to Tariff Regulation DBNGP - Western Australia’s future at stake. GGT - State Agreement should prevail. NCC has recommended “Queensland Regime Not Effective”. Pipelines are covered but tariff is by State Agreement. Legal challenges will follow should Federal Minister agree and
Slide 15: Mendacccity
Mendacccity ACCC claims causal relationship between application of regulation and investment in gas transmission. This claim has no basis in fact. Investment followed privatization not regulation. Future pipelines will be contracted not regulated. Benefits of “open access” are not related to tariff.
Slide 16: Recent Pipelines - Not Tariff Regulated
Recent Pipelines- Not Tariff Regulated Carpentaria - Ballera to Mt Isa SWQ - Ballera to Roma RBP - Roma to Brisbane Looping EGP - Longford to Sydney SEAGas - Victoria to Adelaide Interconnect - Victoria to NSW TGP - Longford to Tasmania NWQP - Bowen to Townsville Telfer - Pt. Headland to Telfer All
Slide 17: Regulatory Environment
Regulatory Environment Review of Regulatory Issues Fundamental conflict between ACCC’s consumer protection role and that of economic regulator of infrastructure. Regulators given too much discretion under the Code. Regulation is intrusive and very expensive. New Energy Regulators - AER, AEMC. APT su
Slide 18: AER is (destined to be) ACCC
AER is (destined to be) ACCC AER employees are ACCC secondees. AER Chair reports to ACCC Chair. AER CEO reports to ACCC CEO. AER budget controlled by ACCC. AER members are Associate ACCC Commissioners. C’wealth appointee nominated by ACCC Chair. AER quorum must have ACCC nominee present. 18
Slide 19: PC Review of Access Code
PC Review of Access Code Report noted. Challenge in designing a regime which supports the emergence of competition but imposes regulatory intervention only where it is likely to generate major improvements in efficiency. A high degree of risk that a Regulator’s price is no more efficient than a non-
Slide 20: Energy Policy Initiatives
Energy Policy Initiatives Federal Ministers policy initiatives are welcomed but there is risk in implementation via the MCE. MCE reform agenda must avoid focus on process and institutions of bureaucratic control and get serious about consultation with investors. Infrastructure investment must be see
Slide 21: Summary
Summary Inevitable decline in SE Australian gas production / contractibility in medium term. Additional gas supply vital by early next decade. The gas industry is undergoing enormous change. Tariff regulation is problematic. New pipelines are not tariff regulated. Future pipelines will be contracted
Slide 22: We Deliver
Australian Pipeline Trust We Deliver www.pipelinetrust.com.au
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